Why It Is Not ‘Cloud First’ in Manufacturing? – At Least Not Yet

Manufacturers seek efficiency, simplicity, continuous improvement and innovation. In spite of this, many are still not warming up to Cloud technologies. Why? When I talk to the CIOs, IT leaders and Business leaders in these companies it is difficult to put a finger on one or two causes. Rather it is a bunch of things.

First of all, it is ownership mind-set. Do I lose control of hardware, software, data etc. if I adopt Cloud? Can I still assure my organization that all our data, IP etc. are secure when they are outside my company? This is a tough issue to crack and will take time to resolve. The only way perhaps is a learning journey travelled together by the company and its technology partners. As we reach the end of the journey, facts will start to prevail over the fear of the unknown and adoption will follow.

The other is the problem of ‘Exclusions’. Many first movers have found moving to Cloud has actually raised their costs. Companies end up paying lot more than what they planned for. This happens because either they did not fully understood what was not included in the base price or did not monitor and manage their resource usage very well and then all the extras started to add up. As more and more cloud providers enter this space, competition will take care of some of these problems – especially when the marginal cost of providing ‘the extra’ is not high. But companies cannot leave all of this to the competition. They will need to monitor and manage their Cloud usage as prudently as they manage their usage of electricity, raw material and other such 3rd party resources.

But there is a bigger and deeper problem which is holding back Cloud adoption. It is companies themselves limiting the possibilities. Cloud is not only about taking your data centre resources to a public or private cloud or subscribing to cloud based apps such as Workday or Salesforce.Com. Companies have a lot more to benefit when they start to become both consumers and providers of Cloud.  This ‘twin-engine’ thinking is essential first step to ‘Cloud First’ model. Companies need to ask how they can get more value by creating access to all our resources e.g., IP, data, idle machines, inventory etc. in an on-demand, scalable, pay-per-use model?

Many innovative companies are already starting to think and operate this way. I recently spoke to the Head of Warranty Management for an auto component manufacturer. He wanted to share the failure statistics of components with dealers and OEMs so that they can better predict and plan their inventory, maintenance plan etc. Another company, I know wants to build a cloud app for QA plan and log for all its products, so that its customers can decide what additional testing they need and together they create a complete end-to-end testing log across the value chain.

Adopting ‘Cloud First’ thinking will not be easy. Current practices, legacy assets and established mind-sets will create roadblocks. One approach to address this will be what companies did when they launched their DotCom businesses – they set these operations as a separate business with deeply integrated IT and Business teams. These teams were not bounded by legacy, had the hunger to innovate and flexibility to operate. Something manufacturers should think about as think about Cloud.

About The Author:- Satya Samal is a Senior Vice President with Hexaware and runs Hexaware’s Manufacturing vertical. He can be followed on Twitter @Satya_Samal